There is no gainsaying that “what one racial group has done, another racial group can do even better.” In this sense, capitalism can liberate Africa the way it did the United States. Indeed it appears to be the only panacea for Africa’s economic stagnation. This is on the assumption that a productive population can never be extremely poor, and that most of the world’s poor are so because they stay idle for most part of the year. Besides, among the world’s poorest places, women only carried out the domestic chores, while engaging in subsistence farming barely sustained families. All the people are never fully engaged in productive ventures. In order to avoid the dissipation of efforts and resources, poor rural communities must come together with all their energies and resources to build wealth together within a system of micro-capitalism.
While seeking the cure for Africa’s economic malaise, a Nigerian economic historian, Nnanna Ukegbu (1985), proposed an economic development theory he called ‘agrarian revolution without tears’. This system envisages an agrarian development without the difficulties that resulted during similar periods in European economic development. To avoid the miseries which the enclosure system caused Europe, he proposed a uniquely African model known as micro capitalism.[1] His rationale is that in traditional agricultural societies, such as Nigeria and Africa, there can be no economic development without agrarian development, and there can be no true industrial development without agrarian revolution. The challenge is how to co-ordinate these two arms of development in Africa.
First, African capitalism must be predicated on the concept of sustainable development, which is development based primarily on the traditional occupations that sustained the people, and occupations for which there are ready and expandable markets. For instance, the major African food crops must also become Africa’s chief cash crops. Sustainable development for the country would therefore be anchored on the mass production of the major African food crop, which would directly lead to food self-sufficiency. Once the staple crop is produced in abundance, the excess would become the impetus for further expansion or industrial initiatives aimed at preserving and exporting the crop and its byproducts to other people and places. The excess agricultural products would become the raw materials for industrial expansion, inevitably leading to improved living standards, which naturally translates into development.
Micro capitalism is the emphasis that autonomous individuals have inherent responsibility to engage in production of goods and services which they can consume or exchange, and acquire skills with which they can engage in such production; it is obvious that, equipped with such skills and muscle, individuals, as in petty farmers, can act in concert to convert their labor into capital and utilize it for maximum economic production.
According to Ukegbu (1985) the principle of micro-capitalism is anchored on the concept of an agrarian revolution without tears, which would constitute the bedrock of what would result in an “Economic Miracle.” He introduced the concept of agrarian revolution without tears, after studying the short term difficulties of the enclosure system practiced at the dawn of British capitalism and agro-industrial revolutions. He was particularly worried about how capitalism dispossessed the peasants of their most valuable asset, land. To avoid this misery, and still achieve the goal of capitalist development, he articulates micro-capitalism in which the same peasants would continue to hold their lands, but bind together in village communities to form huge agricultural cooperatives that would launch them into agro-based industrialization.
To achieve what he considers a lasting remedy against global poverty, there should be systematic plan and action program designed to create world class agrarian and industrial revolution, and induce rapid general economic development in Africa and the developing world. The objectives of this anti-poverty revolution for the twenty-first century have to involve: full-scale agrarian revolution leading to the maximization of agricultural productivity; self-sustaining world-class industrial and financial revolution leading to full and functional employment or self-employment for the citizenry; (both of the above quickened by) a process of educational re-orientation.
I see no reason why African nations could not sufficiently feed themselves, and supply the African and world food markets from their surplus production. The tax revenues of states should quadruple within a short time; as an important by-product of the revolution. Functional illiteracy should be wiped out in the developing world. In short, with the total self-mobilization of the masses for socio-economic development, which the revolution would necessarily involve, virtually new economies would be created in Africa and the rest of the developing world; and the totality of the changes should amount to capitalism-induced economic miracle.
It is becoming increasingly obvious that poverty is in the mind. Many people have defeatist mentality and conclude even before trying that they are meant to be poor or, at best, work for somebody. This is, of course, antithetical to what a successful venture capitalist and economist, our own George Stasen believed as he explained how he instinctively knew from a very young age that he was to become an entrepreneur, creating wealth, rather than just be a job seeker. Obviously, with sufficient mental celerity and focus, anyone can succeed, because poverty and backwardness are clearly socio-economic maladies whose causes are mainly attributable to an inactive and uncreative mind.
Backwardness and low productivity in agriculture and the consequent poverty in purchasing power which it entails, and lower socio-economic and cultural expectations among the great mass of the people makes it impossible for consumer and capital goods and services industries to plan for, or to attain potentially attainable demand-based supply levels and benefits from economies of scale. This position has created a vicious circle of backwards and unproductive agriculture, delaying and stunting industrial growth and general economic and socio-cultural development. Everyone agrees that about 99% of Africa’s agricultural land is cultivated or held by so-called ‘peasant’ micro-farmers.
To incorporate this situation into the proposed African micro-capitalist system, all peasants, or households will continue to own and cultivate their particular farm strip and appropriate the proceeds completely to themselves. Individual farmers and households would pay for the production inputs required for their particular farm plots; and this would be deducted from cash proceeds earned by their own particular products. However, the whole land owned by the community will be treated as if it were owned and farmed by a large capitalist company.
The question that must be asked is: “how will this massive project of agricultural re-organization and development be financed?” The answer is, “through the financial resources which will be generated by organized micro-capitalism.” This would then serve as collateral for the purpose of purchasing and using farm machinery, cash loans, crop processing, storage and sale. The surplus value or profit accumulated translates into wealth, which can be reinvested to generate even greater wealth. Agricultural production will be organized to go hand in hand with other areas of human production, in terms of goods and services. This would render the issue of the so-called rural-urban migration totally irrelevant in Africa and the developing world.
In a truly capitalist free enterprise economy the government owes no one a job. Everyone must accept his inherent responsibility to find a way of producing goods and services to satisfy his needs. Productivity or useful economic production must be geared towards supplying ascertainable demands which itself is related to needs’ satisfaction. The educational system would also promote self-reliance. People who send their children to school and adults who send themselves, as a matter of critical interest should look at the various areas of human demand and choose those in which they would endeavor to acquire production capabilities. In making their choices they would have to consider the level of actual and potential demand in the particular areas over time.
The primary cause of the present alarming level of unemployment for school leavers is that almost every one of those who went to school, went there to acquire capability for public service employment, especially the purely administrative sub-sector in that service. Yet, the area of human need which the public service should be organized and funded to satisfy, that is, national harmony and cooperation cannot be expected to continue to expand ad infinitum. This saturation of the economy with job seekers has resulted in chronic unemployment. Only a functional education can address this anomaly. A good education should result in, at least, a commensurate balance of the numbers job creators and job seekers.
With the current scarcity of employment opportunities across the globe, and especially with people feeling the sharp pinch of over-supply in the public service area, this is the psychological moment to make a radical and positive change in world educational curricula. For capitalism or entrepreneurship to flourish in the twenty-first century, educational systems everywhere, but especially in Africa and the rest of the developing world, must be able to teach productive skills right from grade schools all the way to university, for those who can go so far. It is no longer feasible economically to allow the present situation in Africa, whereby a person can spend eleven years in both, primary and secondary school and yet is in no position to produce any goods or services in demand, which his ‘illiterate’ mother or father cannot produce. And what is worse, because of his little or no participation in practical training in traditional production techniques, he cannot even produce those goods and services which his “uneducated” parents could. And yet he wants to satisfy his basic needs at a higher level than his parents.
Furthermore, it has to be emphasized that anyone, who is not in a position to produce on his own, the goods and services he can consume or readily sell or exchange for the purpose of satisfying the balance of his needs, is neither autonomous nor viable. Viable here is the same as being adequate. This viability which involves the human capacity to think, and create wealth is primarily the responsibility of an active intellect. When man as a rational being fails to get full utility from his brain, something can be said to be fundamentally wrong with his claim of full humanity. Of course many say that lack of capital is the real constraint. So what about capital?
When we speak of “the means of production” the word “capital” immediately comes to mind. How does one get the capital? A counter question should also immediately arise: “What is capital”? To most people, the self-evident answer for “liquid capital” would be “money”, whether in the form of gold bullion or in internally convertible currencies, such as the United States dollar, the British sterling, Japanese yen, to mention the most prestigious. In non-convertible currency areas, such as most of Africa and other areas of the developing world, local currencies, such as the Nigerian Naira would be taken to constitute “liquid capital” for local purposes. Fixed capital would consist of buildings and other such durable heavy-cost property, which could be made liquid by sale or lease.
Too many people who are not acquainted with the evolution of modern capitalism, even “undeveloped” land would not be recognized as capital. And for most, if not all social scientist, “labor” could in no way be regarded as “capital”. Rather, capital is one of the means required for the employment of labor for profit motivated production. Why don’t we look at new settlements, especially in the new worlds, where capitalism had flourished? In all those places the origins of modern capitalism will be traced directly to territorial conquest and the confiscation of land from its original owners or occupiers who were then turned into tenants or serfs. Anything that developed into capital after that was the product of human labor, both, mental and physical. This point will become clearly illustrated to anyone who stops to ponder and ask how much “liquid” or fixed capital the European colonists carried with them to the Americas or Australia for the development of those vast land masses in those great “Frontier” days. Answer: “mostly muscle and machete, digger and pickaxe.” Apart from the means of getting there and the food to eat, till cultivated land could yield its own food, the greatest capital asset taken was LABOR resources consisting of mind and muscle.
The idea of Micro Capitalism is therefore based on the basic principle that “labor” is “capital”. In a frontier-type and virgin situations as exist in developing countries, where all land is controlled at the micro level and where most of the essential needs of the modern life are imported or are not available, and where demand is not a problem, the individual with muscle and skill or capable of acquiring skill has terrific opportunities awaiting him, if only he can devise a means of employing himself either on his own or in company with others. His trump card is his labor and skill. If he can apply his labor resource, the principles of entrepreneurship-producing, saving and investing – then he is made.
Although the idea of organized Micro Capitalism is original and unique, Ukegbu[2] acknowledged that it did not arise as a result of a purely intellectual investigation or academic exercise. It was rather intuitive. Micro-capitalism permits the achievement of rapid economic development from a base of mass backwardness and poverty, without creating foreign financial domination through perpetual foreign insolvency. For rapid development of the impoverished areas of the world, there is apparently no alternative to organized micro capitalism based on the monetization of labor and its utilization as capital.
The main principle of organized micro capitalism is that people with skill and muscle should be organized to convert their labor into investment capital. They should be encouraged to convert a substantial proportion of their monthly labor value into share-based part ownership of their companies; and they must be trained and organized to take active part in the governance of the enterprise. It would then be impossible for any worker or manger in the company to engage in the colossal fraud that now characterizes government-owned companies. Every share holder would realize at once that the thieving executive or worker is stealing his money, stealing part of the annual dividends, and thus reducing the value of his own shares. There could be no greater check on fraud or inefficiency in these corporations.
A governing policy of these productive projects will be the importation of foreign experts to help design and produce the goods and services locally. It will be the duty of poor countries and their public service to reach a national consensus to forgo the false pleasure derived from the consumption of any goods or services which they cannot produce or hope to be able to produce in foreseeable future. This will constrain them to exert themselves to the utmost in order to gain the capability to produce such goods and services, recalling that Adam Smith had defined the wealth of nation as the capacity to produce goods and services maximally.
What about capital? It is the dearth of capital in developing countries that makes micro capitalism imperative. Since the projects under promotion will be owned jointly (by way of marketable shares) by the workers themselves, they will then have to act as part entrepreneurs by investing such percentage of their labor value as will be calculated and jointly agreed by the group. The balance of the capital can then be borrowed from financial institutions or raised from the general public in the form of debentures or ordinary shares. Even though, of course, the details of these plans cannot be given here, their feasibilities are incontrovertible.
Global agencies that seek to eradicate poverty worldwide should promote new mode of capital formation and make it available to farmers in the newly modernized agro-industrial settlements as already described. New financial institutions ought to be created cooperatively by the participating groups in the agricultural and industrial sectors throughout the developing world, with organizational and promotional assistance through Project Promotion and Management Services. Details of some of the projects, which will require urgent attention, as part of the program for the achievement of the “economic miracle” for the impoverished areas of the world in the shortest possible time, will now be delineated. Micro capitalism will do it even more cheaply and more efficiently in these developing areas with the help of imported foreign experts. Existing public corporations and projects should be sold to the people on purely commercial basis. Government will collect interest and dividends on its investments so far made.
All participants, including ordinary workers, will be required to convert about 50% of the values of their participation into ordinary shares in the company. The balance of the cash requirement will be raised from financial institutions. It is calculated that this project should amortize in a few years and that profit could be very high. Hence, many jobs could be created with little foreign exchange involvement.
Meanwhile, governments around the world must stop deceiving their people with non-productive and consumerist economics. Free enterprise has to be encouraged everywhere. In retrospect, it is now very clear that the bogus policies of nationalization introduced by the post-war Labor Party government in Britain has done a lot of harm to the minds of leaders of many developing countries, especially those who were dependent on British rule. They failed to note the fact that Labor’s half-way socialism has been mainly responsible for the decline of Britain’s economic position in the world which set in after the Second World War. To a lesser degree the current penchant for socialism or mixed economy everywhere is increasingly diminishing the capacity of the free market or laissez-faire capitalism to replicate the unprecedented level of wealth it produced in the recent past.
[1] Ukegbu, Basil Nnanna. (1985). Economic Miracle for Nigeria 1985-1999: concepts and action programmes.
[2] Ukegbu, B.N. (1985). Ibid.